Focus on Financial Planning

Keith Costello

Keith Costello is president and CEO of the Canadian Institute of Financial Planners (CIFPs) and the Canadian Institute of Financial Planning (CIFP). Over the past 15 years, Costello has led the creation of educational solutions, practitioner support services and advocacy support for financial planners.

Financial planners and financial advisors need consistent implementation of some key policy recommendations

By Keith Costello |

The Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives' (Expert Committee) recently released policy recommendations to the Ontario provincial government show great promise from a high-level viewpoint. However, in order to be beneficial to financial planners, financial advisors and their clients, these policy recommendations must be implemented in a consistent manner across the investment industry and nationally.

The report focuses on eight recommendations to improve financial advice in Ontario. Here, I will address the following policy recommendations that I believe need to be implemented as consistently as possible within the regulatory and industry landscape in Ontario and, subsequently, across Canada:

> Regulation of Financial Planning


This policy recommendation states that any individuals or firms in Ontario holding out as financial planners, either by title or service, should be regulated. It further rationalizes that firms or individuals whose product sales and advice are regulated under the existing regulatory framework should also have their associated financial planning activities regulated by their existing regulator. In addition, any individuals or firms performing financial planning activities outside of the current regulatory framework should be regulated by the proposed Financial Services Regulatory Authority (FSRA).

It may present a challenge to implement a common regulation standard among various industry sector regulators (mutual funds, securities and insurance), and now the new FSRA. History has shown this to be elusive. The final recommendation on this issue must be more specific to facilitate an effective implementation of this policy.

> Harmonization of Standards
This policy recommendation calls for the harmonization of the education, training, credentialling and licensing of individuals engaged in the provision of financial planning, and that such individuals be subject to one universal set of regulatory standards.

Without one financial planning regulator, this will be difficult to implement consistently across the various regulators and multitude of providers. Financial planners need one standard to hold out with.

> Statutory Best Interest Duty (SBID)
This policy recommendation calls for a SBID to be adopted and applied for all individuals who, and firms that, provide financial product sales and advice, and/or financial planning in Ontario. This SBID would be based on a uniform and codified standard of care.

Regulation: Best interest

This recommendation seems straightforward and on the mark. The salient issue is that it also permits exemptions for those individuals under an existing SBID through existing licence and registration requirements, or those who have a professional legal standard of care and fiduciary duty. Will the proposed SBID be of the same standard as these exempted SBIDs?

> Titles and Holding Out
This policy recommendation calls for the creation of a list of approved titles that are descriptive of the regulated activities financial advisors and financial planners provide to clients. It will also restrict titles that are not on this approved list and it specifically restricts the use of the title "financial planner" based on the individual meeting the standard as described earlier.

It is obvious that approving titles that have merit and restricting others with no substance will be a big step forward. The key will be to ensure that these permitted titles have real rigour behind them in the form of education and standards. It is important that consumers can understand what they are getting but the quality of what they are getting is also paramount.

> Central Registry
This policy recommendation calls for a simple and free central registry to provide consumers with a one-stop source of information regarding the licensing and registration status, credentials and disciplinary history of financial advisors and financial planners.

The key to this recommendation is that one integrated and easy to use system is developed, and not a web of interrelated sites. Good financial planners and financial advisors will be happy to be no longer painted with the same brush as the bad actors.

These policy recommendations from the Expert Committee are a good start to developing a better advice channel in Ontario — and across Canada. The key is to apply these changes consistently. Financial planners and financial advisors need certainty as to what is expected of them in serving their clients and meeting their regulatory obligations. If these recommendations are not accepted uniformly across the industry sectors and their respective regulators, then they will not fix the current confusing system. Furthermore, the viability of the advice channel will continue to be in question.

Expert committee calls for regulation of financial planning, statutory duty

Much support for Ontario expert panel's recommendations